Irkutsk Gas Development Plan Faces Crisis

The development program of the Irkutsk Gas Field of Siberia, Russia, which is designing a pipeline network from Kovicta, Russia to Korea through China, is facing a crisis of failure because it revealed on May 18 that Russia’s government is planning to change the currently scheduled gas pipe route that continues from Angarsk south of Lake Baikal to Daqing, China on the Yellow Sea, to Pyungtack of Korea.

At the Siberia Energy Development Conference sponsored by the Russia National Gas Corporation (RNGC) held on May 14, it was decided that every gas and oil pipe that is to be set up in Siberia will be simplified to route through Khabarovsk to Nakhodka of the Far East Russia line.

This decision has been practically regarded as the thought of Kremlin because the RNGC possesses the plenary power of adjusting every energy-related development program in Russia instead of the government.

At an interview with Russian daily Komersant, employees from BP-TNK, which leads the Irkutsk Gas Field development program, stated that “We can accept the Nakhodka line if it has economic value.” That is, the possibility that the development program, which Korea, Russia, and China have already finished inspections for, may be repealed has increased.

Russia is even considering measures to convert Kovicta gas for domestic use. It has been known that Russia, as an alternative, might suggest the Chayandinsukoye Gas Field of Yakutia, which is located 150 kilometers north from that of Kovicta, increasing the expenditure and time for setting up the gas line.

The alteration of gas line is related to the fact that the Siberia Oil Pipeline has been settled to be simplified into a “Far East Line” that turns towards Nakhodka. The oil line, which was originally designed to take a Chinese route that resembles the gas line, has been adjusted due to the persistent persuasion of Japan. The gas line naturally follows the route of oil line because that can dramatically reduce construction expenses.

There are various reasons for Russia to change the oil and gas line projects to the Far East area despite inconveniencing its relationship with China. Utilizing the Nakhodka Seaport, Russia can aim at the Japanese and U.S. market, and develop the underdeveloped Far East area with large investments from Japan. It is also easy for Russia to connect the oil and gas line from the Northern Siberia that is to be developed in near future. Intentions to check the intimidations of China in the long-term have also materialized in this alteration.

As for China, they don’t need an urgent supply of natural gas right away. But, the problem is Korea. Some experts pointed out that because energy importation is accomplished based on mid and long term planning, an alternative plan should come out in order to prepare for the cancellation of Irkutsk Gas Field Development Plan.

Ki-Hyun Kim kimkihy@donga.com